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Old 15th September 2012, 13:04   #16
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

I don't think so. We have a 'all diesel' garage, and trust me I didn't blink an eye when i first read this news. It hardly makes any significant difference to the fuel costs for you to be worried. Our market has experienced high FE,low fuel cost and better resale value for quite sometime now, so they definitely won't be going back to petrol cars anytime soon.

Whether we like it or not,this skewed demand is here to stay.
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Old 15th September 2012, 13:52   #17
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

For short to medium term, the skewed demand will remain. In longer term I think small capacity diesels will loose favor slowly, although larger capacity diesels will remain. This is because most manufacturers are stating that developing small capacity diesels which comply with upcoming emission norms like Euro6 - stage1 (2014) and Euro6 - stage2 (2017) will become too expensive to justify their use in budget and economy cars. Also technologies like Urea injected SCRs will raise servicing and maintenance costs also.

VW 1.2 TDI is set to be replaced by 1.6 TDI in near future. 1.6 TCDi (and its 1.5 TDCi derivative - specifically for India) of Ford is a replacement for the 1.4 TDCi.

VW has stated that unless there is a huge pricing differential between fuels (read India), small capacity diesel motors will not be economic for users.
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Old 15th September 2012, 13:55   #18
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by Hayek View Post
I think that the skew just has to correct.

India cannot afford to subsidise diesel by Rs. 15 per litre over the long term. The fuel subsidy has wrecked the finances of the central government, the upstream oil companies like ONGC (whose supplies are increasingly shifting towards higher cost fields as old fields run out) and the downstream companies (who have negligible profits and massively negative cash flows since the government makes subsidy payments through non tradable, non interest bearing IOUs).
In a Utopian world what you say may be correct. However, removing subsidy on Diesel won't solve the issues India is facing. You are ignoring the fact that many times over the subsidy is getting siphoned off my corruption in the government itself.

Bottom line is, if the finances of central government is wrecked, it is not because of Fuel subsidy. It is because of CWG, 2G, Coalgate. A good government will stand for the people's welfare and look for sources of finance, other than milking Tax payers more and more. Problem with current government is that they tend to ignore the root cause and look for short term solutions.

Note from Team-bhp support: Please keep the discussion subjective. Avoid personal comments.

Last edited by moralfibre : 16th September 2012 at 07:32. Reason: See note in post.
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Old 15th September 2012, 14:05   #19
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by neofromcapone View Post
Every Time I used to fuel up my Santro, I used to feel cheated and helpless. I changed that by getting a Figo TDCi, not that there is any joy at the fuel pump now. But I feel, less troubled.

On the other hand, even after 5/- hike, the price difference between petrol and diesel is still high. Realistically I expect the price differnce to be kept anywhere between 15/- to 20/-.
Maybe the petrol prices are gonna be lowered. The Congress government has a simple game plan. Do nothing crazy till election time, soak all pressure by opposition, media, allies. Come election time, the fight like their cornered tigers. Once the Rupee vs Dollar is around the 50/- mark. Fuel prices will ease, not substantially, but a little.

Analysts say that if Rupee VS Dollar is around Rs. 50/- mark which is expected soon after the FDI approvals, then expect petrol prices to drop by INR 5 - 7 at least. I am sure that in the coming months, the market skew towards Diesels will reduce to some extent. In such a situation, unless one has a running of atleast 1,500 KMS per month, buying a diesel may not make economical sense.
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Old 15th September 2012, 14:06   #20
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by WhiteKnight View Post
In a Utopian world what you say may be correct. However, removing subsidy on Diesel won't solve the issues India is facing. You are ignoring the fact that many times over the subsidy is getting siphoned off my corruption in the government itself.
....


Well, my question was more related to whether the market for petrol cars can recover or has it been permanently dealt a death blow, though it does seem that people are focusing more on diesel fuel vs. petrol fuel prices.
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Old 15th September 2012, 14:09   #21
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

If one has recovered the excess paid over a petrol car around a lakh rupees, assuming price of diesel is Rs 75 as petrol , diesel makes sense as mileage is at least 30% to 50% more over petrol. A petrol Fabia gives 11 km/litre compared to 15 Kms/litre for diesel
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Old 15th September 2012, 14:57   #22
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Even at the current rates, a diesel vehicle will recover costs in about 4 years assuming a monthly mileage of just about 1000kms. Ofcourse, it costs more to maintain diesel vehicles but I don't think the regular Indian buying a diesel hatch thinks about that.

People only think about the money they pay every week they go to top up the car at the pump.
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Old 15th September 2012, 15:07   #23
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Even at the current rates, a diesel vehicle will recover costs in about 4 years assuming a monthly mileage of just about 1000kms. Ofcourse, it costs more to maintain diesel vehicles but I don't think the regular Indian buying a diesel hatch thinks about that.

People only think about the money they pay every week they go to top up the car at the pump.
Exactly, its the mental satisfaction that one derives week after week while filling up at the petrol pump. Besides the disparity between the petrol & Diesel engines of the same model now also leads to customers looking for a different diesel car which may not have a price difference of Rs. 1 lakh as compared to the Petrol car.

For instance, a petrol Honda City S model costs around Rs. 9 lakhs, a customer may well be confused between a Honda City & a Nissan Sunny Diesel (both of which fall in the same segment)
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Old 15th September 2012, 15:29   #24
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by sharninder View Post
Even at the current rates, a diesel vehicle will recover costs in about 4 years assuming a monthly mileage of just about 1000kms. Ofcourse, it costs more to maintain diesel vehicles but I don't think the regular Indian buying a diesel hatch thinks about that.

People only think about the money they pay every week they go to top up the car at the pump.
Very well put. I had some of my friends whose monthly running was only 800 kms but preferred a diesel vehicle. They were more bothered to remain happy while fuel top ups.

We also need to remember that the auto cos have jacked up the prices of their diesel variants. Mostly a diesel variant launches with a 1.25L premium in many cases compared to the 90K-1L premium 2-3 years back. And they go on to hike the prices of their diesel variants citing the increasing in raw material costs. So in course of time, the actual price difference gets even higher between the petrol & diesel variants.

As a matter of fact, I don't think many of them bother about the statistics behind the "break even", they simply buy the product because they want to spend lesser money in the pumps.
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Old 15th September 2012, 16:18   #25
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

As things stand today, the percentage of purchase decisions which were based on the unrealistically low breakeven period are going to start diminishing albeit slowly at first.

Two reasons for this:

[] There still exists a wide differential between the two fuels. Most folks think it is politically suicidal for any government to target this differential inspite of the current reduction. So the general attitude will be, if I am not mistaken, that this one off hike does not materially change things. Only if there is a firm signal that this differential will soon become history, will people accept this new reality.

[] People to a very large extent have a herd mentality. It is only when there is an appreciable shift in new purchase decisions by the thinking type of buyers who have come to the conclusion that this decision has to be based on the actual benefit derived rather than the perceived benefit from a diesel powered car , will the majority start shifting their preferences.
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Old 15th September 2012, 17:29   #26
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

I have a hunch that diesel prices shall be rolled back, at least by 50% in the next 4-5 days. (It is not the Opposition, but the allies which may force it, lets see...)

Secondly, the fuel economy of a diesel Car is 25% better than its (counterpart) petrol Car.
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Old 17th September 2012, 02:56   #27
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

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Originally Posted by Sheel View Post
I have a hunch that diesel prices shall be rolled back, at least by 50% in the next 4-5 days. (It is not the Opposition, but the allies which may force it, lets see...)

Secondly, the fuel economy of a diesel Car is 25% better than its (counterpart) petrol Car.

That's what I thought to, but looks like the PM is finally pushing his way to Madam Sonia (like he did on nuclear treaty), and also I think Madam has realized that there is hardly any reason left not to implement some reforms - congress is all set to lose 2014 anyway barring a miracle and if the economy does jump back, then may be ....

But we digress, if you had a friends asking for advice on which car to buy and the guy would use the car for more than 10k km/year, what would you advice - a Swift petrol or a Swift diesel (basically petrol vs. diesel version of the same car)?
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Old 17th September 2012, 04:09   #28
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

Well - I have a problem when I drive my i10 on unsubzidized petrol and a VP of my company getting multiple times my salary enjoys subsidized diesel in his 5 series. Its up to the govt. how they want to end this skew - price based / use based tax on diesel cars is an option, if diesel is to be kept subsidized for truck/rail/farm usage.
Eg: An yearly 'subsidy refund tax' can be charged on diesel cars for personal use, which shall be based on the price/size/engine size of the vehicle. Just a thought.
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Old 17th September 2012, 07:19   #29
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

There is an article in TOI this morning that says petrol cars look slightly better value after the diesel hike. Of course this would depend on the actual FE (they have gone by the FE claims of manufacturers) and the running done by individuals. Maybe one more correction in diesel prices would correct the market skew.
http://economictimes.indiatimes.com/...w/16427024.cms

Last edited by wilful : 17th September 2012 at 07:20.
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Old 17th September 2012, 08:21   #30
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Default Re: Diesel Price Hike - end of the market skew in favour of diesels?

I am conflicted. On one hand, I am opposed to widespread diesel in urban areas because diesel particulate emissions (soot) are a terrible thing and not adequately addressed by emissions regulations anywhere except the united states. I am also opposed to differential pricing of fuel and other subsidies and price controls that distort the market, not just for cars but everything from agriculture to industrial transport, causing a grossly dysfunctional and inefficient economy.

On the other hand I do not care for taxation on citizens which only end up being stolen by government leaders and officials or given away to vote banks without regard to efficacy of such programs in making self-sustaining long term economic and sociological development of the people.

In short I want the widespread preference of harmful diesel Due to distorted market conditions to be stopped. But I also don't want the extra revenues to go into the hands of crooked and inept government, when the same money spent by those who have earned it will yield much more efficient usage of that capital.
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